DESCRIPTION: (provided the applicant) We propose to complete and publish a book-length monograph that presents case studies of health services innovation in an era of health care reform. Given this era's dominant health policy themes of cost reduction and quality improvement, it is expected that innovations potentially serving these ends will receive favorable consideration. The primary case study, In Home Hospital-level Care (IHHC), was designed to enhance quality and convenience of service while replacing inpatient care for a large proportion of children currently hospitalized. Envisioned as a bold departure from traditional services provided for acutely ill children by a conservative profession, prospects for adoption of IHHC nevertheless seemed bright, in large measure because of strong prospects for cost reduction. Yet efforts at developing, implementing and studying IHHC in Monroe County (Rochester), NY have been greeted with ambivalence by dominant health care institutions in this community. From institutions with a stated mission to serve the community, this response seems surprising. More careful analysis indicates that the political economy in which these institutions operate constrains their capacity to adopt society's objectives of reducing total costs while improving quality. Given the existing political economy, competing objectives will often be more compelling to dominant health care institutions. Critical attributes identified in the local political economy undoubtedly prevail in many communities. These may similarly constrain innovation elsewhere. Additional case studies of similar innovations, identifying facilitating factors as well as barriers encountered in other communities in the United States, Canada, Australia and probably the United Kingdom, will be included. The specific aims of the monograph are to develop a framework for understanding the local political economy, to present a case study that demonstrates the failure of market driven reform, and to identify an organizational model that would support programmatic innovations both enhancing service and reducing cost. In developing this innovation-supportive organizational model we will draw especially on comparisons afforded by the case studies of related innovations in other disparate settings. The primary case study supports the following specific hypotheses about the local operation of unregulated market forces and the inter-relationship of health services research and reform. (1) The political economy in Monroe County (Rochester), NY, and probably most other communities in the US, discourages health services innovations which reduce acute care hospitalizations, despite potential to improve care while reducing costs to insurers, industry and society. (2) The political economy in which the medical center is immersed plays a dominant role in the acceptance and dissemination of health system innovations. (3) Short term financial incentives of the hospital within the university medical center conflict with long term financial incentives and with strategic plans that must address such critical issues as nursing manpower and optimizing efficiency of services for the future. (4) In the introduction and adoption of major health system innovations, evaluation focused on quality and cost of care plays a minor role. (5) The most powerful study design for health services research, the randomized clinical trial (RCT), has important weaknesses in evaluating community-based interventions. (6) While providing a necessary logical and ethical basis for the introduction of new services, studies of cost and effectiveness of health services innovations should not be emphasized to the exclusion of studies that explicate the political economy in which these innovations must compete to develop.